The Rwandan government has announced its plans to submit a bid to host a Formula One grand prix, with the aim of utilizing the international sports arena to stimulate economic growth in this East African country.
In a statement released last week, President Paul Kagame declared that “Rwanda is eager to rekindle the thrill of racing in Africa by bringing a Formula One grand prix to our shores.”
He noted that discussions have been “progressing positively so far” and emphasized that the government is “approaching this opportunity with the seriousness and commitment it deserves.” If the bid is successful, the race would be held at a new racing circuit near Bugesera airport, just outside of Kigali.
This move is not Rwanda’s first attempt to harness the global sports industry for economic enhancement and to strengthen its international standing. In May 2018, the Rwanda Development Board signed a three-year agreement with the English football club Arsenal, featuring the “Visit Rwanda” logo on the club’s shirt sleeve to enhance international tourism. This partnership was subsequently extended for four more years in 2021, with a cost of £40 million. Similar deals were struck with the French club Paris Saint-Germain in 2019 and the German club Bayern Munich last year.
Rwanda has also invested heavily in basketball, partnering with the NBA and hosting a significant portion of the Basketball Africa League, while also channeling hundreds of millions of dollars into the development of sports stadiums and facilities at home.
The Rwandan government has defended these investments, arguing that major football teams like Arsenal and PSG have millions of fans around the world, thereby increasing Rwanda’s profile as a key destination for tourism and investment opportunities.
As stated by Visit Rwanda, “the Arsenal shirt receives 35 million views a day internationally, making AFC one of the most watched teams globally and providing Visit Rwanda visibility in football-loving countries while aiding its ambition to become a thriving tourism and investment hub.” This perspective likely extends to Rwanda’s aspirations within Formula One, given that the average viewership of a grand prix reached 70.3 million in 2021.
The government believes that these partnerships contribute to the growth of Rwanda’s tourism sector, with over a million visitors arriving in 2022, resulting in nearly $445 million in tourism revenue. Nonetheless, critics contend that measuring the actual benefits arising from sports events or sponsorships is difficult, drawing attention to the significant risks involved in investing in an emerging market with a comparatively low GDP.
‘A risky strategy’
Simon Chadwick, a professor specializing in sports economics, tells African Business that “the Visit Rwanda sports sponsorships primarily function as a communication tactic aimed at boosting tourist numbers,” asserting that “these sponsorships do not represent a true sports strategy.”
“It is likely that some tourists have been drawn to the country due to these agreements. However, transitioning from a tourist destination to a significant player in the global sports arena is a substantial leap, necessitating the Rwandan government to adopt a more strategic stance in its engagement with the sector,” he notes.
Chadwick cautions that investing in global sports as a pathway for growth is a high-risk approach that could lead to considerable debt if not effectively managed.
“Bidding for and hosting sporting events is both competitive and expensive, and history has shown various nations and cities that have overstretched themselves and faced severe financial hardship,” he remarks.
“Should Rwanda choose to pursue the route of hosting events, economic discipline must guide its decision-making. Otherwise, poorly conceived and costly decisions could leave countries and their citizens burdened with decades of debt that are difficult to clear.”
